The Department of the Treasury Form 1065 Instructions is required by the Internal Revue Service to calculate payments for business partnerships. The U.S. Internal Revenue Service is the master of forms. The agency has forms for tax figuring, payments, figuring payments, as well as various forms to submit estimates for required payments on stocks, bonds, interest, income and everything else that the service taxes. Form 1065 provides all the juicy details about what is required to calculate taxes on partnerships and how to make payments, if taxes are due.
You'll need a few items to use the form, including;
- Form 1065, electronic or paper
- Personal business papers and receipts
- PC or blue or black writing pen
- Complete the identification section. Fill out the information portion at the top of Form 1065. You'll need the name of your partnership and your business address. You'll also need your federal employer identification number and the date the business first began.
- Figure out the cost of the goods sold by your business. Although this section is listed on the second page of Form 1065, you have to crunch the numbers here to fill out the front page of the form. It's the government, natch. This is the nuts and bolts information for your business, including the price of your inventory, what you took home and used for yourself, any labor costs, and the accounting system you used to value your inventory. If you don't know the answer to the last question, get yourself to a good accountant, you have no business filling out this tax form by yourself.
- Complete the "Income" section. This section of Form 1065 asks for gross receipts or sales and the cost of your goods. That provides the gross profit amount for this form and uses the figures from the second page. Still with the directions here? You may also need Schedule, also called Form 1040, if you farm and an additional Form 4797 if you have a net gain or loss. After you've put all the numbers together for this section, that amount is figured with the amounts from the other required sections of the form to give you your tax liabilities. Now that your head is spinning, time for the "Deductions" section.
- Complete the "Deductions" section. The "Deductions" section of Form 1065 requires listing the total amount of money paid for salaries and wages, guaranteed payments to your partners, and costs of repairs, regular maintenance, bad debts, rents, interest and taxes and licenses required to do business. This area of the form also asks for the depreciation, and that means filling out an additional Form 4562, not supplied with Form 1065 (no surprise here, it's the government.) You don't have anything better to do but to drive back to pick up more forms, do you? More information needed in this section includes employee retirement plans and the benefit programs your company provides, depletions and any other deductions. You'll need to examine the list of deductions carefully to determine if you qualify for any of the specific categories. These amounts are totaled for this section of the form.
- Fill out the remaining sections. You've done the heavy lifting. The last section asks for the names of the partners and the amount of interest everyone holds. You'll need more forms to complete Form 1065, if any of the partners are foreign nationals, anyone filed bankruptcy during the year, your company did foreign business, interest was paid out in your company or you were traded publicly. If any terms in this Form 1065 instructions are confusing to you, get yourself back to the accountant for valuable assistance. Better safe than sorry when filing this claim.